Oil
Iran deal saps oil prices, cheers Asia shares
SYDNEY – Oil prices hit the skids on Monday after Iran and six world powers sealed a deal curbing its nuclear program, a fillip for global economic growth that found expression in heartier share prices from Tokyo to Seoul.
The agreement gives Iran some relief from crippling sanctions and is considered a big step toward a more lasting treaty. While Iran will not be allowed to increase its oil sales for six months, any easing of Middle East tensions tends to lead to lower crude prices.
Brent crude oil shed $2.89 to $108.16 a barrel, its biggest daily drop in a month. U.S. oil lost $1.37 to $93.47 a barrel. <O/R>
If sustained, the drop would be a net plus for spending power globally given high petrol prices essentially act like a tax on consumers.
“Positive growth signals continue to trickle out across the global economy and there is growth convergence between developed and developing economies,” said Peter Dragicevich, a strategist at CBA.
“Our world GDP “nowcasting” estimate points to accelerating global economic growth in the final months of 2013. This is the general trend we expect to occur in early 2014.”
European shares were expected to open modestly higher, with London’s FTSE 100 .FTSE, Frankfurt’s DAX .GDAXI and Paris’ CAC 40 .FCHI seen up as much as 0.2 to 0.4 percent, according to financial bookmakers.
Attention in Asia was again on Japanese markets as a sliding yen promises to boost exports and profits. The Nikkei .N225 sped ahead by 1.5 percent, having gained almost 11 percent in little more than two weeks.
On Wall Street, the Dow .DJI ended Friday with gains of 0.3 percent, while the S&P 500 .SPX added 0.5 percent for its first ever close above 1,800. Early Monday, S&P 500 futures had added another 0.3 percent.
But with money flooding into developed world assets, emerging markets are getting cold-shouldered. It was notable that MSCI’s broadest index of Asia-Pacific shares outside Japan failed to make any headway at all last week, even as Wall Street made new peaks.
So far on Monday, the index was up 0.3 percent, as Seoul shares led the way with an increase of 0.5 percent .KS11.
YEN PAIN IS EURO’S GAIN
In currency markets, the yen remained under pressure as investors use it for carry trades — borrowing the currency at super-low rates to invest in higher-yielding assets elsewhere.
The dollar was up at 101.88 yen having cracked the old July top of 101.53. Much of the action was in the euro against the yen, which has had a barnstorming run to reach four-year highs of 137.98 yen.
Euro-yen bulls now have their eyes set on a series of peaks from 2009 ranging from 137.43 all the way to 139.18, the top for that year. A break of the 139.18 level would take the euro to territory not visited since October 2008 — very bullish from a technical point of view.
Oddly, the gains have come even as the European Central Bank sounds ever-more dovish on policy.
Earlier on Monday, ECB Executive Board member Benoit Coeure reiterated the central bank would take further action should inflation slow further.
The single currency was been particularly strong against the Australian dollar, which has been undone by threats of intervention from the Reserve Bank of Australia.
The euro leaped almost four full cents last week as the Australian currency crumpled to a three-month trough.
Traders said the commodity currency could continue to struggle particularly if tensions between China and Japan grew.
China at the weekend suddenly imposed new rules on airspace over islands at the heart of a territorial dispute with Tokyo, prompting Japan and ally the United States to warn of an escalation into the “unexpected”.
There is no major economic data due in Asia on Monday, while most of the U.S. economic releases will be front-loaded this week ahead of the Thanksgiving holiday on Thursday.
The U.S. diary includes figures on housing starts and prices, consumer confidence, durable goods orders and manufacturing in the Chicago area.
– REUTERS
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.
Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”
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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.
Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.
We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.
“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.
On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.
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